Reviewed by Aug 27, 2020| Updated on
Redeposit, regarding qualified retirement accounts, is a mandatory repayment of money withdrawn from a retirement or pension account from an employee to circumvent fines and penalties. The redeposit is done to make sure that the individual’s retirement funds are going to be available in the amount anticipated.
It is also made compulsorily to avoid a penalty in the form of taxes or on premature withdrawals. This kind of repayment is often referred to as a redeposit service.
The term ‘redeposit’ sometimes has a vast common implication of a sum of cash or cheque withdrawn and then went on to deposit again in a bank or a material which is taken out and then being put back to its place of origin.
Breaking Down Redeposit
Depending on the kind of retirement or pension account and on the organisation’s internal policies, the employees can avail credit on the balances in their respective accounts. The permission to withdraw from these accounts is generally restricted to particular reasons.
The most popular one is the purchase of a house or covering the cost of higher education for children. This has ensured that the employees can fund their life events with little to no hassles.
Generally, the amount allowed for the withdrawal is restricted only to the contributions made by the employees to the fund. The matching contributions made by the company will not be enabled for the withdrawal. In all cases, the amount withdrawn is considered as a loan or credit despite the fact that you are making a withdrawal from your own account.